Dairy Industry Awaits Key USDA Report on January 30
Published: Friday, January 30, 2026
While President Trump rattled the markets last week in his pursuit of Greenland, threatening additional tariffs on nations critical of his venture, the Agriculture Department issued its monthly Livestock, Dairy and Poultry Outlook on Jan. 16. As usual, it mirrored milk price and production projections in the preceding World Agricultural Supply and Demand Estimates report issued Jan. 12.
The outlook reported that dairy cow slaughter in the first half of 2025 was below 2024 levels. "The low culling levels likely indicate that producers chose to extend the productive life of existing cows partially due to tight supplies of replacement heifers, elevated replacement cow prices, and high feeder cattle prices increasing the value of crossbred calves. Moreover, the low feed prices through most of 2025 likely helped farmers to keep dairy cows longer in the productive cycle. However, during second half of the year, the slaughter rates have been mostly above the 2024 levels, with weekly dairy cow slaughter in the last four weeks of the year averaging only slightly above last year's levels.
USDA will issue its Cattle report on Jan. 30, and it will include milk cow inventory data along with dairy replacement heifer numbers. The report will give insight into the current state of the herd and inform the outlook for much of 2026.
Meanwhile, the USDA's latest Livestock Slaughter report showed an estimated 248,400 head of dairy cows were slaughtered under federal inspection in December 2025, up 44,300 from November, and 23,900, or 10.6%, above December 2024. Total for the year came to 2.641 million, down 84,100, or 3.1%, from 2024.
The latest weekly data showed 60,300 head of dairy cattle were sent to slaughter the week ending Jan. 10, up 14,800 from the previous week, and 4,900, or 8.8%, above that week a year ago. That brought the year-to-date total to 105,800 head, up 6,300, or 6.3%, from a year ago.
The February federal order Class I base milk price was announced last Thursday at $14.70 per hundredweight, down $1.65 from January and $6.57 below February 2025. It is the lowest Class I price since June 2020's $11.42, and equates to $1.26 per gallon, down from $1.83 year ago.
The latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC reported, "Dairy margins were mixed over the first half of January with continued weakness in nearby periods as lower milk prices offset a decline in feed costs, and stable profitability further out on the curve."
"USDA released a surprisingly bearish January crop report," according to the MW. "Raising corn production to a record 17.021 billion bushels on higher yields and increased acreage, counter to pre-report market expectations. While the soybean balance sheet was not quite as bearish, it likewise featured rising inventories on both the domestic and world balance sheets, with corn and soybean meal prices slumping as a result."
"Milk futures remain under pressure from heavy supplies and dairy product production," according to the MW, which also detailed highlights from the November Cold Storage report that I have previously reported. The MW stated that butter prices have dropped to a five-year low and cheese trading down to levels last seen during the onset of the COVID-19 pandemic. However, "Low prices are beginning to stimulate demand."
The 6.3% jump in the Jan. 6 Global Dairy Trade auction (GDT) broke a five-month losing streak, according to the MW. "Low prices need to be maintained for the U.S. to remain competitive on the global market though, with high cattle prices sustaining dairy margins for now," the MW concludes.
Those Class III futures are not encouraging. Last Friday morning the January contract was trading at $14.68 per hundredweight; February, $15.13; March, $15.40; April, $15.63; and May was at $16.20, with the peak at $17.70 in October.
A quick note on the feed front: corn export sales are strong and almost double the five-year-average, according to Western United Dairy's weekly update. Soybean sales remain well behind the historical average, but purchases from China are starting to pick up and export inspections are increasing.
"Strong milk production remains the central driver of milk markets," said the National Milk Producers Federation. "September through November production was up 4% year-over-year on a liquid basis and 4.9% on a milk solids basis. The abundance is driving increased product production, which is outpacing domestic demand."
"Butter, anhydrous milk fat and cheese export growth are providing some relief, but excess supply continues to weigh on producer prices. As milk prices fall, feed costs are rising, leading NMPF to anticipate that DMC payments to fall below the $9.50 per hundredweight coverage level in December and continue at lower levels in 2026."
"The Consumer Price Index held steady at 2.7% annually in December, with grocery prices rising 2.4%," said NMPF. "Retail dairy product prices moved in the opposite direction, falling slightly in December compared to a year ago. However, commercial use of most dairy products fell slightly year-over-year as food service foot traffic falls and retail gains fail to bridge the gap."
In global news, China got serious on buying cheese and butter in December. The latest data showed cheese imports totaled 49 million pounds, up 24.4% from December 2024, an all-time high, according to HighGround Dairy. The largest year-on-year gains came in purchases from Australia and New Zealand.
Butter imports hit 36.6 million pounds, up 28.9%, a multi-year high not seen since January 2020, says HighGround, which credited falling Kiwi prices toward the end of fourth quarter 2025. New Zealand accounted for 94% market share, says HGD, and the Jan. 20 GDT results "Showed North Asia maintaining a strong share of butter sold, suggesting demand from the region has carried into the new year."
Skim milk powder imports were down 34.8% and whole milk powder was off 4.4%. HighGround said, "Strong internal cream production has increased the availability of skim solids domestically, reducing the need for skim milk powder imports, while whole milk powder demand remains supported by displaced internal production."
Whey product imports hit 146.1 million pounds, up 5.9% from a year ago.
Back on the home front, most cash dairy prices moved higher in the Martin Luther King Day holiday shortened week.
The Cheddar blocks climbed to $1.36 per pound last Wednesday. However, they closed last Friday at $1.3550, up 6.50 cents on the week, but still 47.75 cents below a year ago. Traders were anticipating last Friday afternoon's December Milk Production and Cold Storage reports. I'll have details next week. The barrels finished last Friday at $1.36, up a quarter-cent, but 46 cents below a year ago. Seventeen lots of block traded on the week. Only one car of barrel has sold in the last 11 weeks.
HighGround Dairy's "Monday Morning Huddle" stated, "Outside of 2020, the last time Cheddar blocks were below $1.30 per pound was in 2016, and before that it was 2010 and 2009, highlighting how rare this price level is."
Dairy Market News reports that milk output is strong in the Central region and Class I demand was strengthening. Spot sales of Class III milk were steady compared to the previous week but remain light overall, as cheesemakers have plenty of milk within their networks. Mid-week Class III prices ranged from $4-under to $1-over. Spot volumes remained available but some contacts who reported downtime in recent weeks said their plants were now operating full schedules and they were selling fewer spot loads. Cheese production is strong in the Central region, though there were reports that high component levels were reducing the volume of milk that could be processed daily.
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